I was not a consistent diarist in the Howard government. But my notes taken of our pre-budget discussions on August 1, 1996 show that the challenges facing the Howard government 18 years ago had many similarities with the Abbott government’s challenges today. In hindsight, John Howard's cabinet was not necessarily much better at putting together a first budget than Tony Abbott's.

Treasurer Joe Hockey has been wise not to announce the extent of cuts required in the budget. In 1996, then treasurer Peter Costello’s $8 billion target of cuts was a problem. In fact, Howard and Costello had a bad start with the states in a fight over wholesale sales tax and many of us were worried Costello might not fulfil his own cuts target. In contrast, Hockey has handled the states well with his offer on infrastructure.

In 1996 attention quickly turned to the numbers. It was soon clear that the target savings of $8 billion would not be achieved. I took the running on this, saying it seemed a political problem that after the election, when we had been briefed on the figures, that we had set a target for cuts. Then within a few months, we had failed in the treasurer's first budget to meet our own target. I had put this to Costello the day before and he was in agreement with me.

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Not only were we struggling to reach our own publicly stated target we were putting off the cuts.

I said that we should be presented with a list of the next most likely 10 big hits – the ones we had previously discarded – so that we could see where the further dollars might be to meet the shortfall, which finance minister John Fahey said was at least $2 billion. Howard's attitude was that if we got to $7.5 billion then that would be near enough.

My notes from 1996 say: "Much less than that figure and it could be a problem although these are only the underlying figures and we have a headline surplus. Before lunch [Amanda] Vanstone started to tell us the main cuts in her area. Personally, although her cuts build up to 6 per cent of operating costs over about four years – I thought the 1 per cent start figure was too low. I also suggested we could delay the start-up of the family tax package by one month (from January to February) and save $100 million – not much but every dollar counts."

It’s easy to knock up a list of cuts, but in our democracy the cuts have to go through the cabinet. Although Abbott and Hockey are the decision makers they still need the support of the cabinet. The Howard cabinet was pretty good but as soon as Howard nodded "enough", they wanted no more.

When we went through Fahey’s list no one except me wanted to do any of them – freeze the threshold on assets test (it was currently indexed), cut rural research grants, and there were other bits and pieces we didn't even get round to; there seemed little point. Cuts to the diesel fuel rebate were also being discussed, but they were discarded.

Back to my notes: "Costello wanted the diesel fuel rebate scrapped – big dollars – around $1.6 billion and growing, but this decision would only add taxes to business imports which personally I don't see as being such a good idea."

Superannuation was another topic for the Howard government. Today’s system works on the theory that people are not capable of being responsible to save for themselves so the government needs to compel people to save.

It was said that superannuation would reduce the burden on taxpayers, but the Audit Commission has advised that in 40 years four out of five will still be receiving a pension. As my note shows, even back then the Coalition needed a thorough review based on basic principles.

"So once we’d talked the expenditure issues, the comment then turned to superannuation. Apparently Treasury had done some work on it – their paper had been leaked – it was all over the papers. Howard said it was politically unrealistic as it attacked our own political constituency. He is happy to hit the high income earners but he is obviously not yet convinced by Treasury's proposals," I wrote at the time.

Howard had ruled out a GST in the 1996 election and he was under no illusions that Australia’s tax system needed reform.

My notes say: "The revenue committee … will not include a GST but there is no doubt JWH [Howard] has it on his mind for later. He said yesterday words to the effect that there are other matters to be considered but not now. In response to a comment from Ian McLachlan it was quite clear that he was implying the GST."

Howard knew we needed a better tax system.

It’s a reminder for Abbott and Hockey that as soon as the budget is over they have to get cracking as there are some big reforms still to be addressed.

Peter Reith is a former Howard government minister and a Fairfax columnist.

58 comments

The sequel to the book, "The Boy Who Cried Wolf", should be : The PM Who Cried Budget Emergency!

Commenter

meatatarian

Date and time

May 13, 2014, 12:56AM

We await the budget - when all will be revealed; 'cometh the moment cometh the man'

It certainly appears if you believe the leaks that this will be a Texas Chainsaw Massacre combined with a Dirty Harry style budget that wont make our day.

When what is really needed is a steady approach to the spending issue, however not sure how they are planning to raise revenue, oh wait i heard something about a levy that not a tax or was that a tax that's not a levy

Commenter

Buffalo Bill

Location

Sydneys Northshore

Date and time

May 13, 2014, 6:56AM

Bunch of IPAcrits - I am beginning to wish I could believe in hell.

Commenter

Christopher

Location

Abscrapistan

Date and time

May 13, 2014, 6:58AM

Sounds better than' DIY Surplus' by W. Swan.

Commenter

SteveH.

Date and time

May 13, 2014, 7:16AM

@Meatatarian:The one overwhelming feature of LNP governments is their propensity for pessimism. Expert at turning a mole hill into a mountain they exaggerate the size of a problem so they can claim their conservative label as the one true ideology for economic problem fixing. Classic current example, long faces, grave mutterings about a budget emergency, make a few tough decisions and then declare the problem solved. What a beat up, but then its in their DNA

Commenter

JohnC

Location

Gosford NSW

Date and time

May 13, 2014, 7:26AM

Buff, what a wonderful description of the impending budget.Strap yourself in - for one hell of a ride.Broken promises, austerity, pain in spades, anger and disappointment widely spread - so what's not to look forward to?

Commenter

Howe Synnott

Location

Sydney

Date and time

May 13, 2014, 8:43AM

JohnC, Hacka's very first post from another article today is a fine example of everything you just said.

Commenter

meatatarian

Date and time

May 13, 2014, 9:17AM

Hi Buff - Sounds like you're really into chainsaws and guns Buff - should we be worried?

Meat's book title really should be "A Users Guide to Wiping ALP Budget Bums - A Rear View"..........